National Irish Bank & Northern Bank
www.nib.ie www.nbonline.co.uk
Copenhagen, December 14, 2004 Table of contents
Overview of National Irish Bank and Northern Bank Structure 3 Financial highlights 5 Product offerings 6 Key operating financials 7 Balance sheet and regulatory capital 8
National Irish Bank Business overview 10 Competitors 11 Market shares & positions 12 Branches 13 Key operating financials 14 Overview of loan book 15 Loan loss provisions 16
Northern Bank Business overview 18 Major competitors 19 Market shares & positions 20 Branches 21 Key operating financials 22 Overview of loan book 23 Loan loss provisions 24 2 Overview of National Irish Bank & Northern Bank
Detailed organisational structure
National Australia Bank Limited
National Australia Group Europe Limited
National Europe National Europe Holdings (Wealth Holdings Limited Management) Limited
National Europe National Europe Northern Bank Holdings (GB) Holdings (Ireland) Insurance Services Limited Limited Limited
Clydesdale Bank Northern Bank National Irish Bank Yorkshire Bank Plc PLC & Group Limited & Group Limited & Group & Group Companies Companies Companies Companies
Not included in sale Included in sale To be transferred
3 Overview of National Irish Bank & Northern Bank
Business areas
NIB & NB
Personal financial services Business financial services Wealth Management Other
Largest operating unit Second-largest Wealth Management ALM activities operating unit comprises four areas: Represents 51% of Funding and placement total operating income Accounts for 39% of - Financial advice of liquidity group total operating (financial advice Accounts for 45% of Cost centre income through sales teams) total lending and 61% of deposits Represents 37% of - Insurance services group deposits and (marketing and 552,000 retail 55% of lending distribution of third- customers (May 2004) party manufactured 30,000 corporate Three customer insurance) customers segments: Retail, - Investment services Premium and offshore Four customer (management of banking segments: Package investment platform) business, Custom business, Corporate - Trustee and Executor and Agriculture services (discretionary investment management) 4 Overview of National Irish Bank & Northern Bank
Overview of NIB and NB - Focus on personal and business financial services
Y/E Sept. 30, 2004 NIB & NB
Personal Financial Services Business Financial Services Wealth Management Other
GBPm GBPm GBPm GBPm Total income 148.3 Total income 115.0 Total income 12.2 Total income 9.8 Direct costs 49.4 Direct costs 19.8 Direct costs 6.0 Direct costs 37.0 Contribution Contribution Contribution Contribution after bad debts 95.7 after bad debts 91.5 after bad debts 6.2 after bad debts -27.4
Contribution Total income Direct cost (after bad debts)
4 8 3 Personal Financial services
42 26 Business Financial services 54 47 49 66 Wealth Management
5 Overview of National Irish Bank & Northern Bank
Product offerings
Savings accounts Car finance Retail Personal loans Mortgages Credit cards Financial planning
HNW Investment management
Home (Northern and NIB) Travel (Northern only) Insurance1 Motor (Northern only) Life and critical illness (Northern only)
Financing Leasing Business accounts Risk management Business Credit/debit cards International services Overdraft Specialised agribusiness services Treasury 1For Northern Bank, life and critical illness insurance is underwritten by Legal & General, while the remainder (travel, motor, home) is underwritten by National Australia Insurance Services. For NIB, home insurance policies are underwritten6 by Allianz Corporate Ireland. Overview of National Irish Bank & Northern Bank
Key operating financials - Pro forma for NIB & NB
P&L consolidated (GBPm) 2001 2002 2003 2004 Net interest income 185 194 200 198 Other operating income 91 92 89 87 Total operating income 276 287 289 285 Total costs 153 158 161 174 Core earnings before provisions 123 129 128 111 Provisions for bad debts 6 8 5 7 Pro forma profit before tax 117 120 122 104 Tax 35 35 34 30 Pro forma profit after tax 82 85 88 74
Cost/Income Ratio ROE (after tax) 61.1% 55.6% 55.1% 55.8% 21.9% 20.8% 20.8% 17.0%
2001 2002 2003 2004 2001 2002 2003 2004
7 Overview of National Irish Bank & Northern Bank
Balance sheet & reg. capital - Pro forma for NIB & NB
Consolidated balance sheet (Sept. avg) (GBPm) 2001 2002 2003 2004 Total core lending 4,252 4,476 4,823 5,147 Total assets 5,735 5,960 6,415 7,004 Total core deposits 3,909 4,015 4,362 4,577 Total liabilities 5,341 5,548 5,978 6,551 Shareholders' equity 393 412 436 453 Total liabilities and shareholders' equity 5,735 5,960 6,415 7,004
Consolidated regulatory capital (Sept.) (GBPm) 2001 2002 2003 2004 Tier 1 capital 343 365 395 397 Eligible tier 2 capital 194 196 198 227 Total capital 538 561 592 623 Risk weighted assets 4,056 4,243 4,467 4,673 Tier 1 ratio (%) 8.5 8.6 8.8 8.5 Total capital ratio (%) 13.3 13.2 13.3 13.3
8 National Irish Bank www.nib.ie Business overview
Head office: Dublin Important market position in Ireland behind two majors 59 branches and 13 business banking centres Increasing focus on HNW and larger SMEs Customers: 134,000 retail 25,000 premium 8,000 business banking customers 742 full-time employees
10 National Irish Bank
Major competitors
Bank of Ireland www.boi.ie Allied Irish Banks (AIB) www.aib.ie Permanent TSB www.permanenttsb.ie Ulster Bank www.ulsterbank.ie First Active www.firstactive.ie
11 National Irish Bank
Market shares & positions
Share Position Retail Current accounts 3% #5 Savings accounts 1% #8 Mortgages 2% #9 Personal lending 1% #5 Credit cards 3% #6 Corporate SME 4% #4
Source: National Irish Bank and Northern Bank 12 Branches
d Bank Donegal h lan nk 8 a Iris f Ire B l ctive o r A te t irs Bank AIB PermanentUls tsb Nationa F Carlow4331 1 Cavan63494 Leitrim Monaghan Clare1173211 Sligo 5 1 1 Cork 30 50 24 7 2 5 Cavan Mayo Louth Donegal 14 17 6 9 8 1 4 1 1 Roscommon-- Dublin 54 56 31 31 18 21 1 Longford 1 Meath Galway 20 16 9 6 2 1 Westmeath 2 Kerry 9 19 8 3 1 1 2 Dublin Galway 18 Kildare9106812 2 Kildare Kilkenny 5 11 2 2 1 1 Offaly 1 Laois 8321 1 Wicklow Laois 1 Leitrin43215 Clare Limerick 14 19 5 5 2 2 1 Carlow Tipperary Kilkenny Longford51331 Limerick 1 1 Louth 454412 Mayo 14 12 9 8 1 2 2 Wexford 1 Meath1563421 Monaghan543411 Kerry Waterford 1 1 Household disposable income Offaly 6433 1 Cork (relative to state average) Roscommon73431 2 109.8 to 116.7 Sligo 453411 Tipperary 11 16 10 3 1 4 102.9 to 109.8 Waterford9115312 Westmeath644522 96.0 to 102.9 Wexford754411 Average household disposable income: 89.1 to 96.0 Wicklow854311 15,953 Total 289 298 164 136 59 55 Source: Goldman Sachs 82.2 to 89.1 13 National Irish Bank
Key operating financials
CAGR (%) Y/E Sept. 30 (GBPm) 2001 2002 2003 2004 2001-2004 Net interest income 50.1 52.7 60.1 63.8 8.4 Other operating income 19.8 20.7 19.7 18.6 -2.1 Total operating income 70.0 73.4 79.8 82.4 5.6 Direct costs* 34.7 34.7 34.9 35.9 1.1 Contribution 35.2 38.8 44.9 46.5 9.7 Provisions for bad debts 2.1 3.9 -1.1 2.7 Contribution after bad debts 33.2 34.9 46.1 43.8 9.7
C/I ratio 49.6%
47.3%
43.7% 43.6%
*Excluding recharges 2001 2002 2003 2004 For the ease of comparison NIBs financials are stated in GBP 14 National Irish Bank
Overview of loan book
Core lending (GBPm) Portfolio composition (30 Aug., 2004) CAGR Sept. avg. 2001 2004 01-04 Manufacturing 4% Financial institutions 2% Agricultural 4% Overdrafts/revolving line of credit 139.6 130.6 -2.2% Entertainment and leisure Total installment/term lending 645.3 955.6 14.0% 5% Total mortgages 469.0 776.4 18.3% Personal lending and Factoring/invoice discounting 27.2 19.3 -10.8% credit cards 8% Housing Lease finance 36.2 79.4 30.0% 41% Credit cards 24.1 33.3 11.3% Wholesale and retail Total core lending 1,341.4 1,994.5 14.1% 11%
Property & construction 25%
15 National Irish Bank
Provisions for bad and doubtful debts
GBPm 2001 2002 2003 2004 Provisions for bad and doubtful debts 2.1 3.9 -1.1 2.7
Core lending (Sept. avg.) 1,341 1,472 1,777 1,995 Non-performing loans 17 13 17 18
Loan loss provisions/core lending (bp) 16 26 -6 14 Non performing loans/core lending (%) 1.3 0.9 1.0 0.9
16 Northern Bank www.nbonline.co.uk Business overview
Head office: Belfast One of the largest branch network in Northern Ireland 95 branches, 5 agencies and 13 business banking centres Customers: 349,000 retail 44,000 premium 22,000 business banking 2,101 full-time employees
18 Northern Bank
Major competitors
Ulster Bank www.ulsterbank.co.uk First Trust www.firsttrustbank.co.uk Bank of Ireland www.boi.com
19 Northern Bank
Market shares & positions
Share Position Retail Current accounts 21% #2 Savings accounts 13% #3 Mortgages 5% #6 Personal lending 8% #4 Credit cards 12% #3 Corporate SME 36% #1
Source: National Irish Bank and Northern Bank 20 Branches
nk a Londonderry B t s 10 ru T of Ireland Antrim rthern t 39 lster Banko rs County U N Fi Bank Antrim 42 39 26 9 Belfast Tyrone Down 22 24 12 11 11 Tyrone 10 11 6 5 Fermanagh Londonderry 14 10 8 10 Armagh Down 4 Armagh 7735 7 24 Fermanagh 4 4 1 3 Total 99 95 56 43
Source: Goldman Sachs 21 Northern Bank
Key operating financials
CAGR (%) Y/E Sept. 30 (GBPm) 2001 2002 2003 2004 2001-2004 Net interest income 135.2 141.6 139.7 134.1 -0.3 Other operating income 71.6 73.7 72.1 72.1 0.2 Total operating income 206.8 215.3 211.8 206.2 -0.1 Direct costs* 77.3 73.4 73.3 76.4 -0.4 Contribution 129.5 141.9 138.5 129.8 0.1 Provisions for bad debts 3.8 4.5 6.7 4.2 Contribution after bad debts 125.7 137.3 131.8 125.6 0.0
C/I ratio
37.4% 37.1%
34.6% 34.1%
2001 2002 2003 2004 *Excluding recharges 22 Northern Bank
Overview of loan book
Core lending (GBPm) Portfolio composition (30 Aug., 2004) CAGR Sept. avg. 2001 2004 01-04 Mining 3% Other 4% Overdrafts/revolving line of credit 514.6 601.9 5.4% Entertainment and leisure 3% Total installment/term lending 1,182.9 1,102.7 -2.3% Financial institutions 4% Total mortgages 978.6 1,208.9 7.3% Manufacturing 6% Factoring/invoice discounting 54.2 42.0 -8.1% Housing 32% Lease finance 114.3 128.9 4.1% Wholesale Credit cards 66.3 68.1 0.9% and retail 8% Total core lending 2,910.9 3,152.4 2.7%
Personal lending and credit cards Property & 8% Agricultural construction 10% 22%
23 Northern Bank
Provision for bad and doubtful debts
GBPm 2001 2002 2003 2004 Provisions for bad and doubtful debts 3.8 4.5 6.7 4.2
Core lending (Sept. avg.) 2,911 3,004 3,046 3,152 Non-performing loans 43 21 20 19
Loan loss provisions/core lending (bp) 13 15 22 13 Non performing loans/core lending (%) 1.5 0.7 0.7 0.6
24 For more information, please visit
www.danskebank.com/irireland